For companies that manufacture or sell their products in China, it is critical to register your trademarks with the Chinese trademark office as soon as practical. Unlike the United States, China is a first-to-file jurisdiction. This means any third party, including your own manufacturer, distributor, or licensee, can register your trademark in China (otherwise known as "bad faith registration") and hold your brand hostage until you buy (or win) it back.

Because they waited to register their trademarks, many famous Western brands like Apple, Nike, Tesla, Facebook, Hostess and Pfizer have struggled to defend their brand names from bad faith registration in China. Apple faced a ban on exports of its computer tablets from China in 2012 when a Chinese tech firm claimed ownership of the iPad trademark. Since then, export bans by Chinese Customs have only increased, with a total of 22,000 shipments of allegedly infringing products intercepted in 2015 alone. Recently, in December 2016, Michael Jordan finally won a four-year battle against Qiaodan Sports Company, which acquired a bad faith registration for the famous "Jumpman" logo with the Mandarin transliteration of Jordan's name merely by filing for it first.

Concerns Raised by Bad Faith Registrations

While foreign companies have taken advantage of low-cost manufacturing in China, many do not bother to pursue trademark registrations to protect their brands there. But the absence of registered trademark protection in China creates two main concerns:

1. You could be forbidden from using your own trademark in China. For example, you wouldn't be able to sell on T-Mall and TaoBao platforms, because they require a China Trademark Registration Certificate.

2. Chinese customs officials can seize your goods for infringing on the Chinese trademark-holder. You could see inevitable delays and a monetary cost in obtaining the necessary trademark rights through purchase or litigation.

The time and cost invested in registering a trademark in China is trivial by comparison to these potentially major concerns.

How to Protect Your Company from Bad Faith Registrations

Any United States company who does business, manufactures or sources products in China should:

• Register its trademark in China as soon as it is practical.
• Record any registered trademarks with the Chinese Customs Office.
• Remain proactive and aggressive in defending any potential trademark infringement.

Unlike European customs authorities which only focus on imported goods, the General Administration of Customs in China ("GACC") also examines goods leaving China and has the authority to seize allegedly infringing goods based solely on a bad faith registration. As Customs trademark enforcement is on the rise, don't get stuck at the border without necessary brand protection. Trademark registration in China is not to be overlooked.